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business > introduction to business and business objectives and strategies > Flashcards

introduction to business and business objectives and strategies Flashcards

1
Q

enterprise definition

A

the actions of a risk taker starting their own business

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2
Q

entrepreneur definition

A

a person who sets up a business or businesses, taking on financial risks in the hope of profit

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3
Q

what are the factors of production

A
  • land
  • labour
  • enterprise
  • capital
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4
Q

factors of production definition

A

the inputs needed for creating a good or service which results in making profits

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5
Q

what are primary organisations

A

raw materials / natural resources

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6
Q

what are secondary organisations

A

manufacturing the raw materials into a final product

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7
Q

what are tertiary organisations

A

providing services and selling the final product

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8
Q

what are private sector organistations

A

-owned by individuals and are driven by profit
- financed by private money from stakeholders and by bank loans

  • eg dental firms
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9
Q

what are public sector organisations

A
  • owned by the government
  • provide goods and services for the benefit of the community
  • operate with money raised from taxes
  • eg police and NHS
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10
Q

what are third sector organistations

A
  • voluntary and community groups
  • seek to help and not make a profit
  • eg charities
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11
Q

what are local markets

A

when a business only tries to sell locally

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12
Q

what are national markets

A

when a business tries to sell in one country

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13
Q

what are international/ global markets

A

when a business sells all over the world

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14
Q

what is the difference between national and multinational businesses

A

national businesses sell to one country and multinational businesses sell all over the world and have factory’s in 2 or more countries

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15
Q

what is a sole trader

A

a business which is owned and ran by only one person
- can employ people
- responsible for all debts due to unlimited liability

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16
Q

advantages of a sole trader

A
  • self satisfaction
  • owner keeps all profits
  • easy decision making
  • quick and easy to start up
  • no info about profits must be published
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17
Q

disadvatages of a sole trader

A
  • hardwork
    -stressful
    -unlimited liability
  • not much spare time
  • the business stops when owner dies
  • business cannot sell shares
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18
Q

partnership definition

A
  • when a business is started and owned by more than one person
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19
Q

advantages of parterships

A
  • different skills
  • no info of profits has to be published
  • share the workload
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20
Q

disadvantages of partnerships

A
  • profit is shared
  • unlimited liability
  • slower decision making as parteners might not agree
  • cannot sell shares
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21
Q

public limited company definition ( plc)

A

able to offer its shares to the public on the stock exchange

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22
Q

advantages of a plc

A
  • can raise huge finance through shares
  • owners have limited liability
  • business has continuity
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23
Q

disadvantages of a plc

A
  • long time to set up
  • anybody who buys 51% of the business can take over the business
    -public can see info about the business
    -
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24
Q

what is limited liability

A

the owners of a business can only lose the money they have invested if it fails

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25
Q

what is unlimited liability

A

the owner of a business is responsible for repaying all the debts of the business

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26
Q

what is a private limited company ( ltd)

A

a smaller business which can only sell shares to people invited in

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27
Q

advantages of a ltd

A
  • owners benefit form limited liability
    -shareholders can restrict who buys shares ( easier to control )
    -business has continuity
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28
Q

disadvantages of an ltd

A
  • takes a long time to set up
  • ## public can see all info
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29
Q

what is a franchise

A

when a person or a group of people set up a business using a well known brand

30
Q

what is the difference between a franchisor and a franchisee

A
  • franchisee is a small business owner that handles the day-to-day management of a specific location.
  • The franchisor oversees the big picture for an overall brand and all its franchisees
31
Q

benefits to the franchisor

A
  • A classic growth strategy
  • Enables much quicker geographical growth for a relatively low investment
  • Still have the option to open locations that are operated by the Franchisor
  • Capital investment by franchisees is an important source of growth finance
32
Q

benefits to the franchisee

A
  • The franchisee is given support by the franchisor. This includes marketing and staff training. So starting a business in this way requires less expertise
  • The franchisee may benefit from national advertising and being part of a well-known organisation with an established name, format and product
    -Less investment is required at the start-up stage since the franchise business idea has already been developed
  • A franchise allows people to start and run their own business with less risk. ( chance of failure is lower )
33
Q

drawbacks of a franchisee

A
  • Cost to buy franchise – can be very expensive (hundreds of thousands of pounds).
  • Have to pay a percentage of your revenue to the business you have bought the franchiser from.
  • Have to follow the franchise model, so less flexible. You would probably be told what prices to set, what advertising to use and what type of staff to employ.
34
Q

what is a co-operative

A

a business or organisation that’s owned and controlled by its members, to meet their shared needs

  • run on principles of shared ownership, shared voice & shared profits.
35
Q

how do you measure the size of a business

A

-number of employees
-market share
- profits
-sales turnover

36
Q

what is a small / medium enterprise

A

any business with fewer than 250 employees

37
Q

advantages of small /medium enterprise

A
  • managed and controlled easily
  • easily can adapt to meet cutomers needs
  • cheap rent
38
Q

disadvantages of small / medium enterprise

A
  • limited access to source of finance
  • owner has large responsibility
  • fewer opportunity for economies of scale
39
Q

what is a large enterprise

A
  • usually international and have the most market dominance and sales in the market
40
Q

advantages of large enterprise

A
  • can afford to employ specialists and professional managers
  • able to set lower prices ( economies of scale )
    -different sources of finance
41
Q

disadvantages of large enterprise

A
  • difficult to control and communicate
  • slow decision making
  • lots of staff needed
    expensive rent
42
Q

explain what a joint venture is

A

a business arrangement in which two or more parties agree to put together their resources or capital for the purpose of accomplishing a specific task.

  • This task can be a new project or any other business activity.
43
Q

advantages of a joint venture

A
  • JV partners benefit from each others expertise and resources
  • reduces the risk ( especially if entering a new market )
44
Q

disadvantages of a joint venture

A
  • partners may disagree on objectives - causing conflict
    -imbalanced levels of expertise
45
Q

what is a strategic alliance

A

an agreement between 2 or more businesses which work together to achieve a common goal - it is not a legally enforceable contract

46
Q

advantages of a strategic alliance

A
47
Q

what is a stakeholder

A

anyone who has an intrest in a business

48
Q

what are internal stakeholders

A

people who have an intrest from within the business

eg- employees, owners

49
Q

what are external stakeholders

A

people who have an intrest from outside the business

  • eg government, local community
50
Q

objectives of the stakeholders of the business - managers

A
  • want a good salary and opportunities for further career progression
51
Q

objectives of the stakeholders of the business - customers

A
  • want good quality products
    -range of products
  • good customer service
52
Q

objective of the stakeholders of the business - suppliers

A
  • want to receive payments on time
  • want regular orders
53
Q

reasons for conflicts between different stakeholder groups

A
  • different objectives
  • misscommunication between many stakeholders
  • managers want better salary
54
Q

what is a mission statement

A

explains the purpose of the businesses existence, which provides direction to employees, customers and to other stakeholders

55
Q

advantages of having a mission statement

A
  • proves the business is ethical
  • proves the business serves a purpose
    -motivates staff to join and stay
  • encourage directors to make the correct strategic decisions
56
Q

disadvantages of having a mission statement

A
  • not many people see it
  • very vague
  • time consuming to put together
  • sometimes used as a form of promotion
57
Q

what is the purpose of a business plan

A

a document that defines in detail, a companies objectives and how it will achieve that

58
Q

describe some of the main contents of a business plan

A
  • business objectives and aims
  • revenues and costs
  • profit plan
  • goods / services description
  • marketing plan
  • strengths
  • weaknesses
59
Q

advantages of having a business plan

A
  • more likely to get a load from the bank
  • shows organisation
  • gives a structure to the business for employees
  • monitor performance
    -attracts investors
60
Q

disadvantages of having a business plan

A
  • time consuming
  • can be inaccurate
  • not much flexibility
  • very short term
61
Q

what is the ‘ plan - do - review ‘ cycle

A
  • it is a a continuous process that involves planning what needs to be done, doing it, and then reviewing the results to see if the objectives have been achieved.
  • can help organizations to improve their performance.
62
Q

how can the plan-do-review cycle improve the businesses performance

A
  • offers opportunity to evaluate methods and objectives
  • cosistent improvements and corrections can be made throughout production
63
Q

what is opportunity costs

A

the loss of one opportunity when another option has been picked

63
Q

what is opportunity costs

A

the loss of one opportunity when another option has been picked

64
Q

what is opportunity costs

A

the cost of missing out on the next best alternative after choosing a different option

eg - buying a machine but not being able to open a new store

65
Q

examples of non finacial methods of business performance

A
  • customer reviews
  • staff retention
    -market share
  • customer retention
  • company reputation
66
Q

examples of financial methods of business performance

A
  • cash flow
  • profits
  • market share
    -budgets
67
Q

what is cash flow

A

the movement of net cash and cash equivalent being moved in and out of the business

68
Q

what is profit

A

the revenue remaining after all costs paid

69
Q

what is the purpose of forecasting

A

forecasting helps investers and business owners make informed decisions about the future

business (2 decks)

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